Brexit implication

Post-Brexit, What Are the Geopolitical and Economic Consequences for Asia?

For China, the United Kingdom’s decision to eventually excise itself from the European Union’s common market will be a disappointing move. Chinese Premier Li Keqiang has taken a particular interest in the U.K., reciprocated in recent years by Chancellor of the Exchequer George Osborne. Last fall, London became the first international financial hub to issue renminbi-denominated debt after Xi Jinping’s visit there. Brexit will be a setback for the ongoing internationalization of renminbi as London’s relevance as a global financial hub is diminished as a result of Brexit. (As a side note, the onus on China’s economic stewards will be higher in the wake of Brexit—if the Chinese economy wavers like it did in mid-2015, the global consequences could be catastrophic on the back of Brexit.)

Brexit could also mark a setback for China’s long-term goal of a free trade agreement with the EU. London had emerged as one of the most eager advocates for a China-EU FTA; with the U.K. now exiting the bloc, none of the other major EU states seem keen to ink a deal with Beijing. An FTA with the U.K. alone might be politically simpler to negotiate (assuming Cameron’s embrace of Beijing is also adopted by his replacement as prime minister), but won’t have nearly the same economic benefits for China...